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In the ten-month period, Vietnam posts total export revenue of US$229.27 billion, up 4.7% over the same period last year.


 

Vietnam’s imports and exports still maintained a positive increase in the first ten months of this year, making a considerable contribution to national economic growth despite the complicated developments of the COVID-19 pandemic across the world, according to the General Statistics Office (GSO).

In the ten-month period, Vietnam posted total export revenue of US$229.27 billion, up 4.7% over the same period last year. Thirty-three types of goods reported export revenue of over US$1 billion each, accounting for 91.8% of total export revenue, including five types of goods recording revenue of over US$10 billion each, making up 59.9% of the national total.

Heavy industry and minerals were estimated to have had export revenue of US$123.8 billion, up 8.4% over the same period last year. Light industry and handicraft products posted export revenue of US$81.8 billion, up 1.5%.

Meanwhile, the export revenue of agricultural, forestry and fishery products reached US$16.8 billion, down 1.5% and the export revenue of seafood products decreased by 2.5% to US$6.9 billion.

The US was the leading export market of Vietnam in the first ten months of this year with export revenue of US$62.3 billion, up 24% over the same period in 2019.

During the January-October period, Vietnam’s total import revenue was estimated at US$210.55 billion, up 0.4% over the corresponding period last year.

China remained the largest importer from Vietnam during the period with import revenue of US$65.8 billion, a rise of 6.2% over the same period last year.

Vietnam posted a trade surplus of US$2.2 billion in October and a record surplus of US$18.72 billion in the first ten months of this year.

According to the GSO, domestic trade continued to rise in October as total retail sales of goods and services rose by 2.4% over the previous month and 6.1% over the same period last year.

Bac Lieu gets US$3 billion from FDI power project

Delta Offshore Energy, Bechtel Corporation, General Electric and McDermott signed a Master Teaming Agreement this morning at the opening ceremony of the Indo Pacific BizForum in Hanoi to bring in U.S. equipment and services worth more than US$3 billion for the development of the Bac Lieu LNG-to-power project in Bac Lieu province to help address the growing clean, reliable and competitive energy needs of Vietnam.

The project will bring in 3,200 MW of power to Bac Lieu Province and Vietnam, can generate over 20 TWh of electricity annually and will have a regasification capacity of up to 6MTPA.

The total project concession will be up to US$50 billion over 25 years and is expected to import up to 3 million tons of LNG a year. 

According to the agreement, equipment and engineering services worth US$3 billion will be utilized from Bechtel, General Electric and McDermott, employing the best-in-class American technology and engineering from the United States. 

The project is led by Delta Offshore Energy, with cooperation from Bechtel, General Electric and McDermott, along with industry-leading American firms as advisors, including JP Morgan as project finance lead arranger, Hogan Lovells as international counsel, Black & Veatch as technical advisor and Marsh as insurance and risk advisor.

The project is of national importance with public support from Vietnam’s top leaders to ensure energy security for the socio-economic development of Bac Lieu Province, a top shrimp exporting province, as well as the rest of the Mekong Delta of Southern Vietnam, the nation’s rice bowl, which currently faces a power shortage of up to 20%, according to Vietnam’s Ministry of Industry and Trade.

The project is a flagship model for US-Vietnam bilateral relations on trade, investment and energy security and represents a new dawn for private sector-initiated investments in energy infrastructure in Vietnam.

Two fish sauce associations established on same day

The Vietnam Association of Fish Sauce and the Vietnam Association of Traditional Fish Sauce were both launched on October 27, Tuoi Tre newspaper reported.

The Vietnam Association of Fish Sauce represents fish sauce manufacturers, traders, exporters, scientists, managers and testers, whose fish sauce production accounts for 70% of the country’s total. It was set up under the auspices of the Ministry of Health.

According to Nguyen Thi Bich Thuy, a representative of the association, the association will focus on solving problems related to processing methods to help Vietnamese fish sauce products meet the strict standards of importing countries.

On the occasion of its establishment, the Vietnam Association of Fish Sauce donated VND1 billion to help the central provinces deal with storms and floods.

Meanwhile, the Vietnam Association of Traditional Fish Sauce has some 120 members, including over 80 traditional fish sauce makers. The association also gathers representatives of localities that are famous for their fish sauce making tradition such as Nha Trang, Phu Quoc and Phan Thiet.

The Vietnam Association of Traditional Fish Sauce was established under the auspices of the Ministry of Agriculture and Rural Development.

Vietnam’s fish sauce market is valued at some VND6 trillion with an annual growth rate of 13% over the past 10 years.

The country currently has 783 registered fish sauce production facilities and nearly 1,500 fish sauce making households, with a total capacity of more than 250 million liters of fish sauce per year.

Some 270 fish sauce producers, mainly located in the coastal provinces and cities, are capable of making 100,000 liters of fish sauce per year. Most of them produce fish sauce for domestic consumption and only 35 producers export fish sauce.

SMEs struggle with accessing credits post-pandemic

Even though the Covid-19 pandemic has been brought under control in Vietnam, businesses are still struggling, especially since rescue packages have not been effective and the pandemic is still developing complicatedly elsewhere around the world, attendees were informed at a seminar on supporting small and medium enterprises (SMEs) organized by the Saigon Times Group today, October 29.

Data of the Business Registration Department under the Ministry of Planning and Investment indicated that there were nearly 40,000 businesses in Vietnam that had temporarily suspended operations between January and September, surging by some 80% compared with the same period last year. In HCMC alone, some 7,100 companies faced a temporary suspension in the first half of this year due to the impact of the Covid-19 pandemic.

Addressing the seminar, chairman of the HCMC Business Association Chu Tien Dung said the real number could be even higher as many businesses have withdrawn from the market quietly.

According to Dung, stimulation policies have not been effective as numerous businesses have not been able to access the Government’s rescue packages. 

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam-HCMC branch, said credit institutions are the pioneers in supporting businesses affected by the pandemic. Over the past six months, they have supported over 248,000 clients.

“We have asked commercial banks not to refuse to provide capital to businesses that have efficient business plans from now until the end of this year,” Minh said.

Nguyen Thanh Nhan, corporate client manager at Viet Capital Bank, said commercial banks do not lack capital and they are always willing to provide capital for SMEs as long as they can prove their business plans are feasible and effective. To meet the credit growth target, Viet Capital Bank will give priority to SMEs and businesses active in the agriculture and essential goods sectors until the end of this year.

However, some businesses admitted they need to have collateral to borrow money from banks and find it hard to access the credit packages if they are not patrons of the banks.

Many SMEs said their demand for capital during the year-end season is high, not only for their production activities but also for the employees’ allowances. They proposed relaxing lending rules so they can have easier access to the credit packages.

In response, bank representatives said collateral is not a compulsory requirement and the relaxation of lending rules must be in line with bad debt control regulations.

Chu Tien Dung said not many SMEs are capable of coming up with an effective and detailed business plan to be eligible for the credit packages. Therefore, he suggested SMEs and commercial banks sit together to address these obstacles.

According to Nguyen Thanh Nhan, most SMEs are not familiar with digital transformation and online transactions, which are some of the barriers preventing them from accessing credit packages.

“We always encourage SMEs to use more online transactions and apply more digital technologies, which enable us to have a clearer insight into their cash flow. The faster they transform, the more easily they can access credit packages,” he said.

Convention centers on the lookout for customers

Convention centers in HCMC are facing difficulties finding customers to organize large events as all international exhibitions and conferences have been canceled due to the ongoing Covid-19 pandemic.

Thuong My An, general director of the Saigon Exhibition and Convention Center (SECC), said that the popular center, located in the heart of District 7, had not seen any events after Vietbuild, an interior decoration exhibition, took place at the end of September.

In the past, SECC would host three Vietbuild events every year with thousands of booths in both the indoor and outdoor areas. However, this year's edition saw the number of booths slashed by half and without the participation of foreign companies.

The next Vietbuild event is expected to take place in December. However, the organizers are still not sure about the date as they are observing the complicated developments of the pandemic and its effects on the market.

Besides Vietbuild, SECC has only got a proposal for another event at the end of this year. “We don’t know when customers will come back. At the start of the first outbreak, all the events in the first half were deferred to the end of the year and, then again, after the second outbreak at the end of July,” she said.

Before the pandemic, businesses found it difficult to organize events in large economic hubs such as HCMC as the convention centers there were always fully booked.

In 2019, SECC saw firms fully booking the center for events scheduled for between 2020 and 2022.

Not just SECC, other centers such as Phu Tho and Nguyen Du have also seen low activity this year, although they used to be popular venues for exhibitions and fairs in the past.

Meanwhile, some high-end hotels in the city have received guests for some conferences, seminars and small-scale exhibitions. However, the situation remains gloomy.

“We saw some conferences and events at the beginning of October. This month, the number of events has been 70% of that seen in the same period last year but they have been on a much smaller scale,” said a source from a five-star hotel in HCMC.

Vu Thi Thanh Hien, deputy director of Grand Saigon Hotel, said some seminars have been held at the hotel recently, but with fewer participants and on a smaller scale. The segment has yet to see a sharp recovery.

According to enterprises, the exhibition, conference and fair service will face numerous difficulties after the pandemic as it takes a lot of time for businesses to prepare for an event.

The situation of large centers will not improve until international trading activities return to normal.

In Vietnam, the Covid-19 outbreak has been brought under control but enterprises have yet to organize events due to concerns over unexpected risks. The segment will be mired in difficulties for a long time, said An of SECC.

Further, many customers have reduced spending to cope with financial challenges, so they will organize only small events with fewer dishes or decorations.

Support policies for travel firms yet to be approved

Many tour operators and hotels which have been hit hard by the coronavirus pandemic had hoped the Government's support policies would help them overcome the hardships; however, a number of proposed tax and financial policies have yet to be approved.

Nguyen Trung Khanh, head of the Vietnam National Administration of Tourism, said that as soon as the coronavirus pandemic broke out and began to impact the tourism industry, the Ministry of Culture, Sports and Tourism and the administration sent two proposals to the Government to help ease the difficulties facing firms active in the tourism industry.

These proposals were aimed at supporting firms in terms of taxes and fees and laborers through Government relief packages.

In August, the ministry repeatedly wrote to the Government proposing some policies, including extending loan payment deadlines until December 2021 for travel firms and restructuring debts, among others.

Besides, the ministry also proposed reducing value-added taxes, revising down electricity prices for lodging facilities and offering financial support for workers. However, up to now, most of the policies have yet to be approved.

“Consulting with the tourism associations of localities, the Vietnam Tourism Association and some major firms, the ministry has put forward appropriate proposals based on the demand from travel firms,” Khanh told The Saigon Times Online on the sidelines of a seminar in HCMC.

Statistics from the Ministry of Culture, Sports and Tourism indicated that the number of international travelers to the country in the January-September period reached some 3.7 million, down 67.4% year-on-year. Meanwhile, Vietnam served 37.5 million domestic visitors, dipping by 43.2% year-on-year. The country’s tourism sector earned a mere VND233 trillion in revenue during the nine-month period, plummeting by 54% year-on-year.

Mitsubishi to invest US$90 million in Masan’s minerals business

Masan High-Tech Materials Corporation (MHT) on October 26 announced that it had signed definitive agreements to establish a strategic alliance in the tungsten industry with Mitsubishi Materials Corporation (MMC) to develop a leading, high-tech tungsten materials platform.

As part of the strategic alliance, MMC will acquire nearly 110 million newly issued ordinary shares via a private placement for a total cash consideration equivalent to US$90 million. Upon completing the transaction, MMC will own 10% of the fully diluted share capital of MHT and become the second largest shareholder of the latter.

After the completion of the strategic investment agreement, the parties will discuss developing a separate business unit to strengthen and unlock synergies for each respective party’s mid-stream tungsten platform.

Following Masan’s deal to acquire the tungsten business from H.C Starck (HCS), a leading global mid-stream tungsten business, in June this year, MMC’s participation as a strategic partner is a validation of the management’s transformation into a vertically integrated high-tech tungsten platform.

Makoto Shibata, director and chief financial officer of MMC, said, “We have set the tungsten business including the cemented carbide tool business to be one of the major pillars of our growth strategy. I am excited about a new collaboration, which our investment in MHT will create and have a significant impact on our future.”

“Forging a strategic alliance with MMC will certainly accelerate our vision to become an end-to-end global high-tech industrial materials platform. […] The alliance also positions MHT and HCS to build a mid-stream tungsten Asian franchise, which is the missing piece in our strategic puzzle. I am extremely excited and looking forward to developing a long-term, win-win partnership with MMC,” said Craig Bradshaw, chief executive officer of MHT.

Being a subsidiary of the Masan Group, MHT is a leading supplier of critical minerals including tungsten, fluorspar and bismuth. It is currently operating the world class polymetallic mineral resource and chemical processing plant in northern Vietnam.

Regarding the Mitsubishi Materials Group, it is an “integrated materials manufacturer”. The Group meets the needs of customers by providing basic materials such as copper and cement. It also manufactures and sells mechanical parts, electronic materials and components used in automobiles and home appliances.

SIHUB kicks off IPO training program for startups
 
Saigon Innovation Hub (SIHUB) has formally launched the first Initial Public Offering (IPO) training program in Vietnam for innovative startup businesses and investors.

The epresentative of the Ministry of Science and Technology gave flowers to the teaching staff
The IPO training program in within the framework of the project ‘Supporting National Innovative Startup Ecosystem until 2025’, started by the Ministry of Science and Technology to boost the growth of startup entrepreneurs.

The program consists of 14 topics, including What is an IPO?; Conditions to Become an IPO Enterprise; Capital Mobilization – Typical Cases; Merging and Acquisition – Typical Cases; Intensive Business Valuation; Law Observance; Requirements of the Markets and Investors.

The teaching staff is selected from experienced financial and stock experts.

Taking part in this free program, learners are offered a chance to visit successful IPO companies for practical expertise and will be rewarded a certificate at the end of the course.

“There are thousands of opportunities that IPO provides businesses, which means company managers need to be well-prepared to make this process a successful one and can attract more capital”, commented Director of SIHUB Huynh Kim Tuoc.

Nearly 170 people have registered for the program, 74 percent of whom are business leaders. 81 of them are chosen for this first IPO training.

HCMC expands supply chain for FDI enterprises

The Management Board of the Saigon High-Tech Park, on October 28, collaborated with the Department of Industry and Trade of Ho Chi Minh City to organize the signing ceremony of a regional association agreement on the development of a network of supporting industry products with Long An, Binh Duong, Dong Nai, and Ba Ria - Vung Tau provinces.
 

Accordingly, all the parties committed to sharing basic data about the number of enterprises, manufacturing sectors, and product categories in each industrial park, economic zone, and hi-tech park operating in the provinces and cities, and gradually building the ecosystem of supporting industry enterprises. This is also the basis for the direct connection between domestic enterprises and foreign direct investment (FDI) enterprises producing end products.

At the signing ceremony, Ms. Le Bich Loan, Deputy Head of the Management Board of Saigon Hi-Tech Park, said that FDI and domestic enterprises mainly concentrated in the key economic region in the South. It is estimated that the production of the region accounts for 40 percent of the country's gross domestic product. The value of export turnover also accounts for 40 percent of the country.

As for foreign investment attraction, the whole region has attracted US$173 billion out of $345 billion of total foreign investment capital. This has created a great demand for supporting industry products. Therefore, this signing will create favorable conditions for provinces to share information, shorten the supply-demand gap between domestic and FDI enterprises. In the long term, the parties will detail the way of connection, promote the resources and potential of domestic enterprises to promote business cooperation and participate in the global supply chain of supporting industry products.

On the same day, the forum ‘Welcoming new investment waves’ was held by the Vietnam Investment Review. Data from the Foreign Investment Department under the Ministry of Planning and Investment shows that by October 20, the total registered foreign investment capital in Vietnam exceeded $23 billion, equal to 80 percent compared to the same period last year.

Enterprises create resilience for Vietnamese goods

 

The production situation of the food, foodstuff, and beverage processing industry is estimated to have decreased by 2.2 percent since the beginning of the year. Facing that fact, many domestic enterprises have increased their market share in the domestic market to limit the losing momentum. 

According to the Department of Industry and Trade of Ho Chi Minh City, the food, foodstuffs, and beverage processing industry have decreased by an estimated 2.2 percent since the beginning of the year. However, there is a difference in the increase or decrease in each product category. The manufacturing and processing industry of foodstuffs is estimated to increase by 3.4 percent, while it went down 3.1 percent in the same period last year. Beverage manufacturing is estimated to decrease 12 percent, while it advanced by 7.3 percent in the same period.

Explaining this fact, the representative of the Department of Industry and Trade of Ho Chi Minh City said that with the food and foodstuff processing industry, the export turnover of processed food products was only equal to 30-40 percent of that in the time before the Covid-19 pandemic. However, in the domestic consumption market, enterprises have still maintained stable production due to specific characteristics of the supply of essential goods of the foodstuff processing industry. Food and foodstuff retail sales were estimated at VND103.88 trillion, up 11.9 percent over the same period, accounting for 11 percent of the total retail sales of goods.

In the opposite direction, the beverage manufacturing industry fell by 12 percent. The reason is that since the outbreak of the Covid-19 pandemic to now, the purchasing power has decreased sharply. Purchasing power has just recovered from mid-August to now because enterprises have actively built plans to restore production and advertise products. More importantly, thanks to the back-to-school month of September, the consumption of beverage products increased sharply, recovering by about 85 percent. As for the export market, although there was a decline compared to before the pandemic, beverage companies still maintain their market share in markets, namely Japan, Myanmar, and Thailand.

In another perspective, Ms. Ly Kim Chi, Chairwoman of the HCMC Food and Foodstuff Association, said that in the context that the pandemic developed complicatedly, the supply chain of goods was interrupted, and export orders were delayed or canceled, a decrease of 2.2 percent over the same period last year is also very encouraging. This is partly thanks to the enterprises' efforts to actively diversify the market to increase orders and reduce export risks. On the other hand, enterprises have made use of the advantages of supplying goods and expanding market share in the domestic market. Not only export orders but also import orders were interrupted. This has created gaps in the domestic market that previously was dominated by foreign goods, at the same time, creating opportunities for domestic enterprises to increase production, fill gaps in consumption, expand market share, and dominate the domestic market.

It is recorded at many supermarkets in the city that many Vietnproduct categories have become more diversified and plentiful. Ms. Hoang Ho Yen Nhi, living in Ly Thuong Kiet Street in District 5, shared that only for chili sauce, consumers also find it very difficult to choose because there are dozens of products of the same type produced by many companies. Or like rice, consumers have to choose from hundreds of choices about types and brands of hundreds of domestic enterprises.

The representative of Saigon Co.op said that generally, products of domestic enterprises have changed much compared to before. Domestic enterprises not only focused on quality, but the packaging and labels were also improved to create more trust for consumers. On the other hand, in recent years, enterprises have constantly innovated their technology, production lines, and especially increase research to create several new products, attracting the attention and favor of consumers. For instance, for the same cooking oil product, consumers can choose to buy canola oil, Gac oil, vegetable oil, sunflower seed oil, or rice oil. Many enterprises even make use of the plentiful source of domestic agricultural and aquatic materials to process unique and high value-added food products, such as dragon fruit dumpling, watermelon vermicelli, and dragon fruit baguette.

According to enterprises, within the framework of the National Brand Program, the Ministry of Industry and Trade has collaborated with relevant ministries, provinces, associations, and enterprises to implement the brand building program for the food industry of Vietnam. The program was launched in 2014, but up to now, it still encounters many limitations. After being supported, enterprises still lack certain resources to develop their brands and increase consumer awareness across the country. Besides, the psychology of preferring foreign goods is still deeply rooted in people's cognition. Therefore, along with building brands for Vietnamese products, it is essential to increase trade promotion activities, support enterprises to develop and advertise product brands. In the long run, Vietnamese brands will take root in the consumption habits of people, creating a sustainable resilience for Vietnamese goods in the domestic market.

All enterprises in Hanoi use e-invoicing, meeting target 3 months in advance

E-invoicing helps businesses save a significant chunk of expenses related to paper invoices, including printing, storing, and administrative procedure compliance cost.

As of the end of September 2020, 99.7% of total enterprises and business associations in Hanoi have registered to use e-invoices, three months in advance of the target set by the Hanoi People’s Committee, according to the municipal Department of Taxation.

The Department of Taxation pointed out a shift to e-invoices from paper-based ones brings multiple benefits for both enterprises and the society. The agency has been promoting the benefits of e-invoicing to the business community upon instructions of the municipal People’s Committee.

Additionally, the Taxation Department has also published hotlines and emails for taxpayers to report concerns, and sent information related to e-invoices to enterprises in Hanoi for their convenience.

For enterprises, e-invoicing helps them save a significant chunk of expenses related to paper invoices, including printing, storing, and administrative procedure compliance cost.

Moreover, using e-invoices is much safer as all data is stored in servers, helping firms quickly trace back information of their business partners and the origin of the invoices if needed.

For the society, e-invoicing would minimize risks of billing frauds and ensure transparency and contribute to the development of e-commerce, in addition to keeping a healthy and fair business environment.

Under a national plan for the development of e-commerce by 2025 released on May 18, the Vietnamese government has set the target of achieving around 55% of the population shopping online with an average spending of US$600 annually by 2025.

Revenue from online sales of business-to-consumer e-commerce, known as B2C e-commerce, is set to grow by 25% per year to US$35 billion, accounting for 10% of total goods retail sales and service revenues.

Meanwhile, the government expects the share of population using related services, including non-cash payment services, would be at 50%, and through intermediary payment services at 80%.

By 2025, 80% of e-commerce websites should integrate with online shopping and 70% of them will provide electronic invoices.

Notably, Hanoi and Ho Chi Minh City would make up half of e-commerce revenues in the next five years.

Business formations in Vietnam surge 18% m/m in October

The total number of newly-registered and reinstated enterprises in the ten-month period reached 148,900, down 0.3% year-on-year.

New business formations in Vietnam in October rose by a sharp 18.4% month-on-month to 12,200, according to the General Statistics Office.  

This month has also witnessed a decline of 18.5% month-on-month in combined registered capital to VND165.6 trillion (US$7.14 billion) and a fall of 12.7% in the number of workers hired by new enterprises to 72,400.

The number of newly-established enterprises in Vietnam in the first ten months of 2020 was 111,200 with registered capital of a combined VND1,594.1 trillion (US$68.8 billion), down 2.9% in number but up 11.1% in registered capital year-on-year. Average registered capital per newborn enterprise was VND14.3 billion (US$617,122) during this period, up 14.4% year-on-year.

Taking into account VND2,298 trillion (US$99.17 billion) of additional capital pumped by active enterprises, total registered capital injected into the economy in the January-October period was VND3,892.1 trillion (US$168 billion), up 17% year-on-year.  

The government-run office informed that 37,700 enterprises resumed operations in the period, an increase of 8.2% inter-annually, bringing the total number of newly-registered and reinstated enterprises in the ten-month period to 148,900, down 0.3%.

The GSO added that the number of laborers of newly-established enterprises between January and October was 850,300, down 2.9% against the same period last year.

During this period, the number of enterprises temporarily ceasing operations surged 58.7% year-on-year to 41,800.

Moreover, the number of enterprises which completed procedures for bankruptcy was up 0.1% to 13,500. 

Since the outbreak of the Covid-19 pandemic, the Vietnamese government has been implementing a wide range of support for the business community, with the latest move being a cut of 30% in the corporate income tax for enterprises having their revenue of less than VND200 billion (US$8.61 million) in 2020.

Additionally, other supporting programs consist of a credit aid package worth VND300 trillion (US$12.87 billion), including a VND180-trillion (US$7.63 billion) fiscal stimulus package in forms of delay of payment of value-added tax, corporate income tax, and a financial support package for vulnerable people worth VND62 trillion (US$2.7 billion).

Vietnam’s packaged food enjoys double-digit growth in post Covid-19: Kantar

Vietnam’s fast-moving consumer goods (FCMG) market growth returns to its pre-Covid-19 level in the short term.

Amid the Covid-19 pandemic, the packaged food sector is leading FMCG market growth, expanding 26% in the past three quarters, and is expected to grow 16% in post-Covid-19, promising great opportunities by capturing new in-home occasions, according to the latest report by Kantar Worldpanel Division.

Based on Worldpanel data, within packaged food sector, snacking products still remains double-digital growth in terms of value and volume in the first nine months of 2020 in both Vietnam’s urban and rural areas. 

Among hot categories, personal care recorded 13% growth in the period. Beverage market has recovered with 8% growth in post-Covid-19 in four cities (including Hanoi, Danang, Can Tho and Ho Chi Minh City), while still struggled to bounce back in rural areas in post lockdown periods. 

In the short term, not much impact has been seen from the second wave of Covid-19 starting in central Vietnam areas at the end of July. The market growth is getting back to its pre-Covid level, the report noted, and there could be a continued slowdown in the last quarter of 2020 as consumers might delay purchases, especially in central rural areas where consumer spending would be further affected by the flood and typhoons.

Notably, Kantar showed retail growth is cooling across all channels. With its value growth of 65%, online channel continues to gain share and is the fastest growing format post the social-distancing period. Following are drug stores (53%), pharmacy (33%), minimarket (22%), hyper & super (15%), cash & carry (14%) and wet market (14%). 

The report also highlighted that due to the global pandemic, the desire to live more sustainably might affect Vietnamese purchase behaviors post Covid-19. About 57% Vietnamese surveyed shoppers said that they stopped buying some products/ services because of their impact on the environment or society. Meanwhile, the world figure is 41%. 

Fitch Solutions revises down Vietnam fiscal deficit to 3.6% of GDP

The economy is likely to stage a stronger recovery in Q4 this year, versus 2.6% y-o-y real GDP growth in Q3.

Fitch Solutions, a subsidiary of Fitch Group, has revised down its forecast for Vietnam’s fiscal deficit in 2020 to 3.6% (excluding debt repayment) of GDP, from 6.4% previously, staying below the latest government projection of 5 – 5.1% in May.

Including debt repayment, the projected deficit would be 7.4% of GDP, assuming no change to the government’s budgeted repayment target of about VND245 trillion (US$10.57 billion) for 2020.

Fitch Solutions’ deficit forecast revision is due to slow expenditure disbursements during the year alongside a sharp revenue decline owing to tax relief provided in light of weak economic conditions as a result of the pandemic.

Additionally, it also forecast a 3.6% deficit in 2021, expecting the government to continue pushing for quicker public funds disbursement to accelerate public investment to make up for delays during 2020.

Meanwhile, Fitch Solutions has revised its 2020 forecast for Vietnam’s state revenues to contract 12.9%, from a previously forecast fall of 7.3%.

According to data from the Ministry of Finance, total state revenue and grants as of September only stood at VND975 trillion (US$42.06 billion), 64.5% of the budget projection at VND1,512 trillion (US$65.23 billion). This was mainly due to a shortfall in corporate and personal tax collections which were at 58% and 70% of the full year target.

The category of export-import taxes, excise duties and environment taxes also saw an underperformance, where collection for the first nine months of 2020 only stood at 56.2% of the budget target. To be sure, shortfalls in these areas are in line with Fitch Solutions’ expectations, although the magnitude appears to be larger than it had previously anticipated.

Low collections in these areas can be attributed to tax relief measures extended by the government at mid-year to aid the economy through the pandemic-induced economic crisis. These measures included an extended deadline for excise tax payments for domestically-produced/ assembled cars to late 2020, a 30% reduction to current environmental protection tax payments until end-2020, and a 30% cut in corporate taxes payments for small and micro-sized enterprises for 2020.

The economy is likely to stage a stronger recovery in the final quarter of the year, versus 2.6% y-o-y real GDP growth in the third quarter, as Vietnam has managed to contain its domestic outbreak and has since seen most domestic containment measures been lifted, which Fitch Solutions expected to improve revenue collection in tandem. A continued recovery of the economy will support stronger fiscal revenue collection in 2021, and Fitch Solutions forecast total revenues to grow by 17.5%.

Meanwhile, Fitch Solutions has revised its expenditure forecast to a 6.1% decline, from 8.3% growth previously. Expenditures for the first nine months of 2020 came in at VND1,113 trillion (US$48.02 billion), representing 63.7% of the budget target.

This was mainly due to slow fund disbursement for public investment, which was only at 57.2% of the full year target at VND267 billion (US$11.52 billion). Current expenditures were at 71.6% of the annual budget at VND758 billion (US$32.7 billion).

Fitch Solutions referred to report by Hanoitimes quoting the Ministry of Finance that public fund disbursements were mainly held back by difficulties in site clearance and resettlement, as local authorities and the landowners were unable to reach an agreement on land handover for project execution. Other problems include adjustments to financing agreements and investment procedures of overseas developmental assistance-funded projects causing delays in the construction process, and the Covid-19 pandemic causing delays in the import of capital equipment and arrival of foreign project advisors.

Prime Minister Nguyen Xuan Phuc has since set up seven task forces to speed up the disbursement of public funds as well as warning officials would face disciplinary action if their ministries or localities fail to realize their respective public investment disbursement targets for 2020.

Fitch Solutions believes that these measures will go some way in accelerating capital expenditure during the final quarter of 2020. In 2021, Fitch Solutions forecast expenditures to grow by 16.6% as a rebound of economic activity as well as government efforts to expedite public capital expenditure should drive rapid growth in expenditures. Additionally, Fitch Solutions forecast real GDP growth to recover to 8.2% in 2021, from 2.6% in 2020.

A fiscal deficit will naturally imply additional borrowing. However, assuming that debt repayment is unchanged, Fitch Solutions estimates public debt-to-GDP to rise slightly to 57.0% at end-2020, from the government’s estimate of 56.1% in 2019. This is because the budgeted debt repayment amount would exceed the estimated deficit for the year. This puts the ratio even further below the government’s statutory limit (debt ceiling) of 65% of GDP.

Vietnam targets 15 billion-dollar private enterprises by 2025

The average growth rate of newly established enterprises is expected to reach 15% per annum in 2021 – 2030.

Vietnam targets to have at least 15 billion-dollar private enterprises by 2025, and the number would rise to 20 by 2030, according to a report from the Ministry of Planning and Investment (MPI).

During the 2021 – 2030 period, the average growth rate of newly established enterprises is expected to reach 15% per annum, while the number of medium and large firms would make up 5 – 6% of the total by 2025, and 8% by 2030, stated the MPI in an ambitious plan to spur the development of the private sector.

Additionally, the MPI expected the average growth of the labor force to be around 6 – 8% per annum, and income growth of laborers to average 25 – 30%.

In the draft political report to the upcoming 13th Party congress, the private sector achieved significant result in 2011 – 2020, making up 43% of total GDP and creating jobs for 85% of the total labor force.

As a result, the sector has played a key role in facilitating the economic restructuring process and become a major source of investment capital in the fields of tourism, urban development, automobile industry, hi-tech farming, trade and services, among others.

To aid the development of the private sector, the government has been giving priority to improving the business environment, which has been reflected in efforts to cut 50% of administrative procedures and business conditions.

This helps spur the expansion of the business community both in number and in registered capital. Despite the severe impact of the Covid-19 pandemic, the number of newly-established enterprises in Vietnam in the first nine months of 2020 was 99,000 with registered capital of a combined VND1,428.5 trillion (US$61.61 billion), down 3.2% in number but up 10.7% in registered capital year-on-year. Average registered capital per newborn enterprise was VND14.4 billion (US$621,853) during this period, up 14.4% year-on-year.

In the next 10 years, the draft socio-economic development strategy for the 2021 – 2030 period identifies the necessity of stronger growth of private enterprises.

In the short term, the government would focus on supporting the business community overcome difficulties from the pandemic, at the same time encouraging leading firms in some sectors to play a more active role in the overall growth of small and medium ones.

The move, along with innovation, quality human resources and efficient supporting policies from the government, would play a key role in the development of private enterprises, expected the MPI.

Exports shatter record with $18.7 billion in trade surplus: GSO

Việt Nam's exports rose 4.7 per cent year-on-year in the first ten months of this year to US$229.2 billion, for a trade surplus of a record $18.7 billion, according to the General Statistics Office.

In October alone, export value was estimated at $26.7 billion, down 1.7 per cent month-on-month but up 9.9 per cent year-on-year.

During the 10-month period, 31 goods earned over $1 billion each from exports, accounting for 91.8 per cent of the total. Five brought home more than $10 billion each, or 59.9 per cent.

Heavy industry and mining raked in $123.8 billion, up 8.4 per cent year-on-year. Light industry and handicrafts, meanwhile, reported revenue of $81.8 billion, up 1.5 per cent; agro-forestry $16.8 billion, down 1.5 per cent; and fisheries $6.9 billion, down 2.5 per cent.

The US remained the largest importer of Vietnamese goods in ten months, with a turnover of $62.3 billion, up 24 per cent year-on-year. It was followed by China, with $37.6 billion, up 14 per cent; the EU $28.9 billion, down 3 per cent, ASEAN $18.9 billion, down 11.6 per cent; the Republic of Korea (RoK) $16.3 billion, down 2.6 per cent; and Japan $15.6 billion, down 7 per cent.

Total imports in October were estimated at $24.5 billion, up 1.2 per cent month-on-month and 10.1 per cent year-on-year. Ten-month imports totalled $210.55 billion, up 0.4 per cent year-on-year.

As many as 34 types of goods saw import turnover exceeding $1 billion, accounting for 89.4 per cent of the total.

China remained Việt Nam’s largest import source, with revenue standing at $65.8 billion, an increase of 6.2 per cent against the same period last year. It was followed by the Republic of Korea (RoK), with $37.4 billion, down 5.3 per cent; ASEAN $24.4 billion, down 8.5 per cent; Japan $16.5 billion, up 2.5 per cent; the EU $11.8 billion, up 4.2 per cent; and the US $11.6 billion, down 2.4 per cent. 

Exports shatter record with $18.7 billion in trade surplus: GSO

Viet Nam's exports rose 4.7 per cent year-on-year in the first ten months of this year to US$229.2 billion, for a trade surplus of a record $18.7 billion, according to the General Statistics Office.

In October alone, export value was estimated at $26.7 billion, down 1.7 per cent month-on-month but up 9.9 per cent year-on-year.

During the 10-month period, 31 goods earned over $1 billion each from exports, accounting for 91.8 per cent of the total. Five brought home more than $10 billion each, or 59.9 per cent.

Heavy industry and mining raked in $123.8 billion, up 8.4 per cent year-on-year. Light industry and handicrafts, meanwhile, reported revenue of $81.8 billion, up 1.5 per cent; agro-forestry $16.8 billion, down 1.5 per cent; and fisheries $6.9 billion, down 2.5 per cent.

The US remained the largest importer of Vietnamese goods in ten months, with a turnover of $62.3 billion, up 24 per cent year-on-year. It was followed by China, with $37.6 billion, up 14 per cent; the EU $28.9 billion, down 3 per cent, ASEAN $18.9 billion, down 11.6 per cent; the Republic of Korea (RoK) $16.3 billion, down 2.6 per cent; and Japan $15.6 billion, down 7 per cent.

Total imports in October were estimated at $24.5 billion, up 1.2 per cent month-on-month and 10.1 per cent year-on-year. Ten-month imports totalled $210.55 billion, up 0.4 per cent year-on-year.

As many as 34 types of goods saw import turnover exceeding $1 billion, accounting for 89.4 per cent of the total.

China remained Viet Nam’s largest import source, with revenue standing at $65.8 billion, an increase of 6.2 per cent against the same period last year. It was followed by the Republic of Korea (RoK), with $37.4 billion, down 5.3 per cent; ASEAN $24.4 billion, down 8.5 per cent; Japan $16.5 billion, up 2.5 per cent; the EU $11.8 billion, up 4.2 per cent; and the US $11.6 billion, down 2.4 per cent. 

Source: VNA/VNN/VNS/SGGP/VOV/NDO/Dtinews/SGT/VIR